Employee roles in governance: contrasting the UK and German experience

Abstract

The paper examines the role of employees in governance. The paper highlights from a theory basis that employee and shareholder utilities can be coincident. However, it shows that corporate practice with respect to employee involvement in governance and decision-making is diverse. The paper draws out the contrast in approaches between the Anglo-American and the German approach to employees by detailing differences in employee power, career patterns, ownership patterns and legal obligations. These lead to enactment of a different structural and cultural governance systems; which are encapsulated in the unitary board structure of the UK and the two-tier German approach. The strengths and limitations of the unitary board and two-tier boards are highlighted, and the case for convergence examined.